What Every Dentist Should Know About Private Equity Opportunities – Part Two – Episode #590

On this episode of the Dentist Money Show, Matt and Ryan dive into part two of their series on the complexities and risks associated with private equity in the dental industry. They discuss the importance of building a strong financial foundation, such as having a solid emergency fund and understanding profit margins before exploring private equity opportunities. They share the importance of staying focused on your primary business and navigating the private equity landscape with caution and clarity. Tune in for actionable insights to help you navigate the potential of private equity opportunities with more confidence.

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Podcast Transcript

Intro: Hey everybody, welcome back to another episode of the dentist money show brought to you by dentist advisors. Today we have part two of our two part series that Ryan and I get a little spicy around private investing. We share our thoughts, our views, our opinions, and beliefs around private investing and the scary side of private investing.

The things that you should be thinking about as a dentist, the way you’re targeted and some of the recent, issues that we’ve seen in the dental space around private investing and some of these mastermind groups, all in hopes of, trying to steer you in the right direction to avoid pitfalls of others, the mistakes of others in this space, and hopefully start making better decisions around your money and investing. As always, we hope you get something out of this of value, and we hope you enjoy the show.

Ryan Isaac: Part two of our part two was we’re picking up where we left off. And, I first want to say, my favorite part of that recording that you listened to dear audience a week ago, was when you brought up the checklist that we’re building apparently. And, if you missed it, go listen to

Matt Mulcock: Apparently, apparently we’re doing something for work.

Ryan Isaac: Our team’s always building like so much cool

Matt Mulcock: Content. We build a lot of

Ryan Isaac: There’s so many people doing it. And I’m always just like amazed by it. But, yeah, what you brought up this like checklist that we’re building of. here’s the criteria we think as dentists that you should meet before you start entering anything serious into private equity. Besides the fact that private equity is already on your balance sheet in the form of a dental practice, and it’s like 70

Matt Mulcock: You want to do a quick review of that?

Ryan Isaac: Of the checklist. Let’s do it quick. I won’t interject. I’ll sit silent because we’ll, we’ll turn this into a sidebar side quest.

Matt Mulcock: Don’t ever do tangents. All right. We’ll do a quick review of the, of the checklist, for those of you that may be missed last episode or just a refresher. This is a work in progress, but this is what we’re thinking is that before you entertain any private investing, you need to have emergency fund, both personal and at the business. So personal being three to six months living expenses. Business is one and a half to three months of business overhead in cash. You need a profit margin, a true profit margin of, I’m saying 15%. I’d say, So we’ll do a whole other show on this of the difference between seller discretionary earnings and true profit margin. Those are two very different

Matt Mulcock: SDE versus profit margin, two very different things. Most dentists are going to look at, here we go, going side quest. Here we are. Okay. Most dentists are thinking of profit margin. They’re really thinking about seller discretionary earnings, which is just how much income am I pulling out of this practice from all sources? that is not profit. So, we’ll do a whole other show on this, but profit margin, I’ll say minimum 10%, but I think really it should be 15%, after debt and after your true associate wage. Savings rate of 20%, a, liquidity score. So one of one, meaning one year’s worth of your spending in liquid accessible funds, so that could be brokerage account cash, that is a minimum requirement. For you to start going after extra debt

Ryan Isaac: I’m going to speak up. I don’t think that you’re even going to sleep well at night until you hit a one of your liquid score. One year’s worth of your spending in some liquid form that you can access without a penalty.  I don’t, I just don’t think you’re sleeping well at night if you don’t have that.

Matt Mulcock: Different than emergency fund it’s liquid so it could be it should be invested most likely in like a brokerage account And then that’s before you get extra aggressive with debt and then a liquid score of five meaning five years worth of spending in liquidity accessible funds without penalty for you to entertain anything with private investments and then once you’re there And maybe we’re missing something as far as, there’s other things we’re going to add to this possibly. But once you’re there, no more than 10 percent of your investable assets in anything private or what we’d call alternative.

Ryan Isaac: High risk alternative. I was just doing some numbers really fast in my head one of the things I said yesterday is, I don’t even want to talk about this with someone who has less than a million dollars in just like investable liquid assets, but your five year rule is actually dead on. If the average dentist spends about 17, 000 a month, times 12 is like two Oh four a year times five. It’s a million dollars. So if you don’t have a million dollars in investment, investable assets, Then yeah, and, you know, keeping it to a relative good, 10 percent of your investable assets into something high risk, private illiquid, which we’re going to get into today is going to require you to have about a million dollars to do anything significant because anything legit is going to need like at least six figures from you.

Matt Mulcock: Yep, and again what we talked about last time the funny thing about this is if you did all this You checked all these boxes. You had a 15 percent profit margin in your practice after debt and associate wage Savings rate of 20 percent all this liquidity Chances are a this is gonna take a while for you to get there And the funny thing is you’re gonna get there and you’re gonna be like, why would I do anything else?

Ryan Isaac: Like, why

Matt Mulcock: It’s working

Ryan Isaac: It again?

Matt Mulcock: So that’s the funny thing about this

Ryan Isaac: Is when you meet these requirements, like if you’re not done already, you’re on your way to being done without doing

Matt Mulcock: Anything else other than, because again, this is simple, but not easy. The other thing I should, I should probably add on this list at some point. we’ll brainstorm with our team, but, probably something around specifically your debt to income ratio.

Ryan Isaac: Going to say like height or eye color or

Matt Mulcock: I mean, that’s different. That’s all another list. Um,

Ryan Isaac: Have to look like

Matt Mulcock: Yeah, Chris Hemsworth. Yeah, you have to look like Chris Hemsworth. but something with debt to income ratio probably. Well, your debt rate.

Ryan Isaac: That was my favorite part from our part one. It went an hour, and that was my favorite part. That was, that was really cool. I think it’s very helpful. right. After everything we’ve said, if you are ready, here’s how you start to navigate getting in. How do you

Matt Mulcock: Getting in. How do you actually get involved with private equity? Yeah. Which includes like, sourcing everything, the research, protecting yourself, understanding the risks. so that’s we’re going to hit today. Yeah. I

Matt Mulcock: So I think we start, I love this for us. I love this journey for us. so I think we start with, as you said, picking up what we left off, which we didn’t talk about the broad kind of risks to think about, which I think leads right into things to consider when, when picking or getting into this stuff. So again, we’re assuming you’ve got the checklist. We’re assuming that you have been disciplined and focused on this checklist. and so now you’re at this place that

Ryan Isaac: By the way, I mean, just to reiterate, that checklist is just to keep yourself safe. You’ve been a decade in school. You’re probably seven figures in debt from your school and your practice and your career, not to mention the rest of your life. We just don’t want someone to mess up all of that hard work, money, sacrifice, and progress and energy from a career. That’s going to take you to the finish line. Without doing much. Yeah. You know hard. It’s hard, but nothing too fancy or crazy. We just don’t want you to break that.

Matt Mulcock: Yeah, we’re

Ryan Isaac: Because you can make it just with this foundation.

Matt Mulcock: The whole saying, I think, I think it comes from Morgan Housel. I think, don’t sacrifice what you have for it. You don’t really need

Ryan Isaac: Oh gosh, yeah. Uhhuh,

Matt Mulcock: Kind of sums up all the private equity. It’s like, why are you sacrificing what you have? And I think to that point, the checklist I think creates hopefully

Matt Mulcock: Process in a system for you to show. Oh my gosh. Like I have a lot to lose here now. Like I built up a,

Ryan Isaac: Yes. I have a lot to lose. I have momentum. Like it’s, this is going to be,

Matt Mulcock: A system. We keep digressing. We keep tangent

Matt Mulcock: Side questing. Okay. So we’re assuming you’re at that place and you’re saying, okay, 10 percent of my investable assets. I can now start going you know, Matt, Ryan, I just have something. I have an itch. I have to scratch.

Ryan Isaac: It sounds interesting. I have enough now. I don’t need to take the risks. So now I kind of want to. Yeah.

Matt Mulcock: So that’s the other thing we talked about last time is the risk profile to understand, but again, we’re assuming all these things are done. So now we’re at a place where it’s like, okay, what are the specific risks we have to be considering? With private investing, right? So number one, I think, and in no particular order, but this is, I think one to consider and a huge difference you were talking about last time.

Ryan Isaac: Real fast. Can we bundle the word risk with cost in various forms, risks and

Matt Mulcock: Risk slash

Ryan Isaac: Kinds of costs involved. Different kind of risk trade-offs. Yep. Risk costs, trade-offs. The tradeoffs.

Matt Mulcock: So you were talking last time about how they’re sold. A lot of times it’s like this non correlated asset, right? which means, I mean, basically it’s like, if one’s going up, this is going down and vice versa,

Ryan Isaac: Usually it’s around the stock

Matt Mulcock: Truly yeah. Correlation is like, you can see correlation or non correlation within, within the stock market with like sectors, the healthcare sector versus the technology sector, whatever. So. This is how it’s sold a lot. this relates to this because if you compare private investments versus the stock market, the stock market is highly liquid, which means you can get access to it very quickly. Yeah. The trade off you’re making with private investments almost every time is illiquidity.

Ryan Isaac: I haven’t seen a private investment in my career doesn’t mean anything, but I haven’t seen one where there you have access to liquidity within days. I mean, it’s at best. I have seen some funds now. I mean, here’s the funny thing though. The higher the amount of liquidity, the lower your return is going to be.

Ryan Isaac: That’s the cost you pay for. That’s the cost of liquidity. If you put money into a brokerage account in the stock market, we know what long term, returns are in the stock market, which are still phenomenal when you start compounding average returns over years. It’s crazy, but there’s a cost of that liquidity. You should expect higher returns if you can’t get your money.

Matt Mulcock: What you are describing is what’s called a premium. So if, if we talk about investing as a whole, anywhere the benefit. So there’s always again, what is called a premium. So a premium is just saying, I’m giving up something, I should expect something back. So for example, let’s take the stock market, I’m giving up certainty. by going into the stock market. So in return, you’re getting a premium of a higher expected return compared to like, let’s say cash, the same thing with private investments. But here’s the key. You should expect what they call an illiquidity premium, but do you always get it?

Ryan Isaac: You do not always get it. That’s the crazy thing is, you pay the cost of not having access to your money, but you don’t see the returns all the time. I mean, this is just the

Matt Mulcock: The date you have to truly understand. This is what lead into the next risk, but. You have to truly understand the philosophy of, okay, if I’m going to give up my money, a lot of these private investments, you’re talking five to 10 years, they’ll just tell

Matt Mulcock: You’re not getting this back

Ryan Isaac: Yeah. I got, I got side quested in my brain, but what I was getting at is some of the biggest, most liquid, legit, private equity funds that I’ve seen some clients do that have some, a little bit of liquidity. I’m talking like next quarter, you might be able to get some. But that’s liquidity in private, you know, like in four months I might be able to get a little bit of money. Maybe that’s pretty liquid in the private sector. but you’ll pay in returns. Yeah. Yeah. If they have to keep that much liquidity or it means they can’t deploy the capital. They have to hold money around or be able to pull it out of their investments, which reduces their returns to you as an investor. So at best was what I’m saying at best, the most liquid private equity I’ve seen is like months out. Okay. And it’s not all your

Matt Mulcock: Let’s just be honest, any legit operation out there and private equity is not going to give you access to that

Ryan Isaac: Why would they want to? They’re they five years, their whole job is to beat average returns of public stocks.

Matt Mulcock: They need that money to do

Ryan Isaac: And you have to deploy every ounce of your capital. You can’t have cash reserves.

Matt Mulcock: But so that’s, that’s key. There’s to understand the structure of that and understand that. And this comes back to what you’re saying of what we’re, when we say, after you’ve checked all these boxes, you still have to put guardrails around this because if you’re giving up, let’s say you’ve got a million dollars, you’re at that minimum.

And you’re like, Hey, I’m going to put a hundred grand into these things. I’m locking the a hundred grand up. If you’re in any legitimate operation for private equity, it’s going to be locked up for five, 10 years. So that’s why you have to only, that’s why you have to restrict yourself to, how much money you’re putting

Ryan Isaac: 10, that 10 percent threshold, as you’re saying, as I’m just thinking, Matt, how many examples can you think of right now? At the top of your head, someone had a million dollars, but

Matt Mulcock: Oh,

Ryan Isaac: No, it’s probably true out of like 20 that they actually just use the whole million dollars for the private equity investing. They went a hundred percent. They didn’t do 10, 15 or 20. They did 100. They’re like, yeah, I got a million dollars, all millions going private equity. And

Matt Mulcock: I know. It’s rough.

Ryan Isaac: Examples lately, what’s triggering a lot of these discussions lately, Is the fraud and the Ponzi schemes and the bankruptcies and the people committing crimes and fleeing the country and taking investors money that we’ve been seeing in the dental industry across all these clubs and groups. And people did that. They didn’t take 10 percent of their money. They took 100 percent of their money and they trusted these sources. And now it’s a mess and just angry. It makes me mad.

Matt Mulcock: No, it, it honestly, like you said, this is what’s triggered these conversations lately, where you and I were like, we got to go talk about this because of these investment groups, like you said, where people put way too much money and how dare these groups seriously, we’re going to go with a parental theme here. Shame on you seriously

Matt Mulcock: I’m going to shame the crap out of these guys. How dare you pretend to be a fiduciary and to say you are a quote unquote, trusted advisor.

Ryan Isaac: If they use that exact

Matt Mulcock: I’m I don’t want to be defaming anyone legally, so I don’t know. Allegedly, allegedly,

Ryan Isaac: You know that’s what people assume

Matt Mulcock: I know they use things like trusted advisor,

Ryan Isaac: Yeah. The perception of the clients. The perception of the investors. The dentist getting into these things. They assume you have a fiduciary or a responsible kind of protective advisory.

Matt Mulcock: Stand for that. allegedly these groups would put themselves out there as like the ve like we have a team that

Ryan Isaac: Team that’s vetting. All the

Matt Mulcock: While all they’re doing is they’re allegedly getting paid on both sides of the

Matt Mulcock: But what I was going to say really quick, coming back to this idea of, putting guardrails on yourself. I think the most egregious offenders of the people you’re talking about from the investor side are what I’d call like the baby millionaires, the new millionaires

Ryan Isaac: Which I mean, I’d love to be, that’d be great.

Matt Mulcock: Would be amazing. But, but the people who it’s like, cause a million dollars in a brokerage account is a lot of money. It’s a lot of

Ryan Isaac: Crazy to get to that

Ryan Isaac: That’s only five years of spending for the average dentist. That’s what’s scary is like, that is a gigantic amount of money that takes a long time and it can be wiped out in five years or less for the average dentist spending habits. Five years. Like,

Matt Mulcock: The other part of this is, so this might be offensive, but so a million bucks is a lot of money. We’re not saying it’s not. But you’re not still at a level. That like, even at that level, I think the problem is, these people at this level, I’ll call them baby millionaires. I think it’s the most dangerous level to be at, because generally, these types of people in this kind of, in this cohort, they’re the ones who think they’re richer than they

Ryan Isaac: That’s the new money versus old money mentality.

Matt Mulcock: It was just kind of like, I think they’re chasing the people that have, 20 million in a brokerage account or even 10 million in a brokerage account. They want to feel like they’re at that level. So they’re like, oh, well, this guy’s doing private equity. It’s like, yeah, he’s worth 10x you.

Matt Mulcock: Yes, but you, you want to be at that level. So I think those are the scariest ones because to your point, those are the ones that start throwing their entire brokerage account at something and blow

Ryan Isaac: You know what I think the actual common factor in that is, is high income.

Ryan Isaac: Um, you can see it in like friend groups, neighborhoods where, I can just think of people I know that are actual wealthy people. And it’s usually people have like built and sold companies, you know, and they’re sitting on like 50 million or a hundred million plus, you know, just absurd amounts of money. That’s not in my purview.

Matt Mulcock: Not in my personal interest. And it’s

Ryan Isaac: Crazy because, some of the, some of the people that I have seen over the years that have that kind of money are the kind of people who like, don’t even buy cars for their kids or make their kids pay for their own college and their kids live poor when they leave the house.

It’s the people who have, like, Almost no actual wealth, but high incomes that are doing some of the most egregious

Matt Mulcock: Most expensive,

Ryan Isaac: The most showy stuff. It’s like that new They don’t have family money. It’s not like, you know, it’s not generational stuff It’s just they’re the first people in their generations to have high incomes high cash flow, but actually not a lot of wealth

Matt Mulcock: You can be broke, you’re rich but you’re

Ryan Isaac: You’re making a million dollars a year and you’re still not wealthy. And those tend to be the kind of people who will throw around the money the most and be the most reckless with it and like spend the craziest.

Matt Mulcock: That’s such a good point,

Ryan Isaac: Like, it’s like the, the false sense of security of a high income. Like it’s almost a trap sometimes.

Matt Mulcock: You you feel wealthy because you’re

Ryan Isaac: Well, it’s coming in every two weeks. It’s just pumping into your bank account. And you’re like, this will never shut off. I can never run through this, but

Matt Mulcock: But it’s not wealth. You’re not

Ryan Isaac: It’s not wealth. And going back to the boring old statistic, dentists just spend a lot of money. our average is like 17 per month. It’s

Matt Mulcock: In that range. Yeah. Somewhere in the 17 range.

Ryan Isaac: A seven figure bank account can get wiped out in less than five years. That’s so a million dollars is no longer a lot of money for a dentist, which means that you can’t afford to lose it. You can’t afford to lose 10 percent of

Matt Mulcock: No. Well, I think that’s a good distinction to make when we talk about this exact thing is just because you have a high income does not mean you should be playing with the wealthy people because you might not even be wealthy even though you have a high income. How many people, Ryan, do you see that have a, five to 10x the average American in income, but they’re living paycheck to paycheck?

Ryan Isaac: That’s, I mean, statistically,

Matt Mulcock: 600, 700 grand in

Ryan Isaac: Know that. I mean, we see that.

Ryan Isaac: We watch that happen. Especially, we watch that in the dental communities in expensive cities, like coastal towns. You’ll see people making 750, a million, a million plus,

Matt Mulcock: And they’re broke.

Ryan Isaac: They’re broke because life is so expensive and you just wonder like, how, how do you blow through that much money? And you just, you can spend money so fast. So what’s crazy? You think about. It’s a million dollars. All right. 10%, but 10 percent is a hundred grand. And that’s. That’s six months of a dentist spending

Matt Mulcock: Yeah.

Ryan Isaac: You’ve got five years in that million dollars. it’s scary and you just have to protect yourself, which is why these costs and trade offs and risks matter so much to fully understand the best you can.

Matt Mulcock: With what these costs and trade offs and risks matter so much to fully understand

Ryan Isaac: Even that half a million dollars to turn into life changing

Matt Mulcock: Or even that.

Ryan Isaac: Compared to what difference it would make if I lost it. Yeah. Yeah.

Matt Mulcock: Like people get really bent out of shape, but we talk about typical average returns for a long time, a long period of time. But it’s like, that is a proven system. And again, just always take a step back and think of the a hundred grand I’m putting into this, whatever this is. Okay. It has to 10 X to get to a million.

Ryan Isaac: And does a million dollars change a dentist’s life permanently? No.

Matt Mulcock: We just said it’s only five years worth of your

Ryan Isaac: That’s insane to talk about a million dollars. It’s not life changing money, because I think to the average person, and especially out of the United States, it totally would. To a dentist, it doesn’t change your life. That gives you maybe five years of average spending. Maybe.

Matt Mulcock: Gives you maybe five years of average pay. Five of those.

Ryan Isaac: Like five of those. Yeah. It.

Matt Mulcock: So the illiquidity of private investments, number one, risk, number two, these, these go hand in hand and we’re, we’ve already kind of mentioned this, but, or sorry, we’re talking about cost trade offs of, and risks of this. another one being the lack of transparency in private

Matt Mulcock: So, so why this is connected is we’re saying you have to expect an illiquidity premium. If you’re going to give your money up for five to 10 years, here’s the problem. They’re so non transparent.

Ryan Isaac: And they don’t have to be.

Matt Mulcock: I don’t have to be. And so you don’t even know until the end of you getting your money back or not getting your money back. And a lot of what actually

Ryan Isaac: And then, maybe

Matt Mulcock: And then maybe, maybe not, maybe you got

Ryan Isaac: Because a third of the partners ran to Mexico and fled the

Matt Mulcock: Or the deal just didn’t go well or whatever. Oh

Ryan Isaac: Joke was based on actually what’s happening right now. A third of one One of the

Matt Mulcock: Is that really what’s going

Ryan Isaac: One of the partnerships, at least one of the members ran to, uh, South America.

Matt Mulcock: Yep.

Ryan Isaac: There’s no transparency. You don’t know what is happening behind the scenes. since we’re trying to say, like, how do you get involved with this stuff? to maybe go back a little bit. Try to understand as best you can, what access to liquidity you have. These are questions you have to ask and don’t expect much liquidity from your first point. Number two on transparency, some of the more legit and bigger private equity funds have external, unconnected, like outside auditing and accounting firms. So these are non internal auditing firms that do their financial auditing and reporting. The legit firms will have something like that. Look for that. look for an external non internal company that’s doing the auditing and reporting of the finances.

Matt Mulcock: And some legit track record for past investments that they’ve done.

Ryan Isaac: Kind of history. the bigger firms and funds out there will also have like a board of people, usually like a dozen plus people with deep backgrounds in these areas. What we see a lot of the times is you’ll get, Oh man, we could even be really specific. You’ll see, let’s say a group of dentists get really DSO exits and then start a private equity group and then be like, we’re going to, you know, help deploy your money into like, you know, high density real estate in the Southeast of the United States. And you’re like, well, you spent

Matt Mulcock: That was very

Ryan Isaac: Dentistry. I’m making this up. If that lands on someone specifically, I don’t mean that. I don’t have any names in mind. That’s just what will happen. You’ll take, you’ll have someone from other industries, have an exit in their industry and then jump into this like private equity investing world. I can give you a lot of examples that I’ve seen. around, like land development and real estate where you’ll have like, let’s say successful tech entrepreneurs that exited a successful, like partners and huge attorney firms. You know, they, they exit, they retire at 50, they’re sitting on tens of millions of dollars and like, Oh, I’m going to start a land development fund. And so what you’re getting is people with financial success in one industry jumping into private equity investing, which they have, and they they’ll grab a buddy or

Matt Mulcock: Yeah, of course, always a buddy.

Ryan Isaac: Right. Like, you know, this person’s been doing it, but where I’m getting at the, the legit firms will have like a dozen plus board members with deep backgrounds, very specific backgrounds, on this stuff. We just sat with a company in Texas, had a dinner and their entire management team, I call them boards, but it’s management teams. They’re like in oil and gas and drilling and their entire management team is like, Oh yeah, that guy’s like 30 years just on equipment. Oh, that, that woman over there is like 20 years and she’s only on like dirt and soil samples. And so you’ll see a list of management team with backgrounds like that, like really weird, super niche, like decades long backgrounds in that area. Not like three people who used to be like tech entrepreneurs or DSO exit people. And now they’re real estate. Private equity investors. Yep. That’s not what you wanna be looking for in this transparency part.

Matt Mulcock: Yeah, the other thing that just popped up when you were saying that, it were kind of like interweaving the trade offs with how to, things to be thinking about when going into these investments. But speaking of that group we talked to in Texas, the structure of the deal, meaning you need to understand when I give you a dollar, In this case, lots of dollars, 250, 000. What’s the structure of the deal? Meaning is this through a third party subsidiary fund of a fund of a fund because every, or is this a direct investment?

Ryan Isaac: Does this go right into your companies? Yes. Or is there like a middle

Matt Mulcock: Is there a middle, any middle people or structure? Guess what that just means. Cost.

Ryan Isaac: The amount of hands that,

Matt Mulcock: They’re taking their

Ryan Isaac: Cause they won’t say commission, they’ll say like, fundraising, commission, fundraising fees, sales, management fees, marketing fees. Uh

Matt Mulcock: So any, any layer between you and the actual investment, any layer is coming at a cost directly out of your return. So you need to understand the structure. When I give you money, how is this structure? The other thing to think about is who are you raising money from? Got to understand who, like, these are questions to

Ryan Isaac: Oh yeah.

Matt Mulcock: Where are you raising

Ryan Isaac: Yeah. You’re they came to you as a dentist and they asked you for a quarter million dollars. Like who were the other

Matt Mulcock: Who else

Ryan Isaac: So, so right, man. Like where else are they getting money from? Uh huh.

Matt Mulcock: To parks and meeting people and being like, do you have money you want to invest in this deal? I don’t know.

Ryan Isaac: A park. Can you imagine?

Matt Mulcock: Just like

Ryan Isaac: It was like bill by the seesaw.

Matt Mulcock: I saw this guy over here. He’s pushing his daughter on the swing and he’s investing

Ryan Isaac: Like, you got 20 grand. I got some oil and gas for you. We said this in the previous episode, but are you part of an investment pool where they have high minimums from like actual wealthy people? Or are you part of like hundreds of people giving 10 grand a pop? And then if you are, you have to ask like, why does this company need like 10 grand from hundreds of people instead of like. Half a million dollars from 20 people. So who is the investment pool? Where is money coming from? Is there institutional money? Is there big money coming in? That’s a vote of confidence sometimes

Ryan Isaac: Where’s the money

Matt Mulcock: Vote of confidence sometimes. Track record structure of the deal. You’ve got to understand this stuff and the entity structure of it.

Ryan Isaac: Yeah. What is the legal entity setup? Yep. Because that’ll dictate how you’re gonna get taxed on this

Ryan Isaac: What you have to file, what kind of liabilities you hold as an investor. In some of these things, the bigger they are that your liabilities are probably low, but you know.

Yeah.

Matt Mulcock: Do you understand the business itself? Like meaning just theoretically or philosophically, what are they doing? Can you explain to someone else what they’re doing? Like, if you can’t don’t touch it.

Ryan Isaac: Yeah, and, to be fair, a lot of times they’re really hard to understand because they have these pitch decks, you know, 20, 30 slides long, and they’ll just show you like some of the, but it, It’s hard to understand these things. I mean, it’s kind of hard. Sometimes it’s not intentional. Sometimes it’s just jargon and they assume everyone knows what you’re talking about. It’s kind of like when my dentist like starts pointing at the x ray and he’s like over here, occlusion and M3 and D17. I’m like, I,

Ryan Isaac: I don’t, I don’t, eventually they see the look on my face and they’re like, what, what do you have to poke? And drill a hole in that’s what I want

Matt Mulcock: No, my dentist is speaking my language.

Ryan Isaac: Good, good communicator.

Matt Mulcock: You’re an idiot. You’re an idiot. And so I’m going to talk to you like that.

Ryan Isaac: Mine, mine tells me what, so I just understand very little. So yeah, like it’s hard to understand even what’s going on, but do you understand what, when they take the money and they close the fund and they’re done fundraising, what happens next? Just logistically,

Matt Mulcock: How do I get my money back? And when, when,

Ryan Isaac: And when, and what are they doing with the money? Like just understand the project at a base base level. Oh, they’re taking 10 million and they’re pairing it with some loans. This happens a lot from some banks and then they’re going to go buy this gigantic apartment complex that’s currently empty. They’re going to renovate or kick people out or switch. Then they’re going to increase rents and then they’re going to move people back in and then they’re going to take profits and then sell like just what’s happening in the business. Yeah.

Matt Mulcock: Their debt

Ryan Isaac: But it’s hard. I mean, again, going back to the company we sat

Matt Mulcock: Whole other profession.

Ryan Isaac: Like the company we sat with was, I mean, he was explaining, very down to earth and basically like how, the oil and gas industry work, but it is so complex. I was like, wait, where do you get the equipment from? He’d be like, Oh yeah. this is a whole other thing. So there’s an equipment industry and then you can buy or lease, but it’s too expensive. So then companies build this stuff and then they lease it out and it’s like, wow. I had no idea. How complex it

Matt Mulcock: And the land leases and how they’re, yeah.

Ryan Isaac: Yeah. And then you own the land up to like 50 meters and then the dirt on top tells, it’s crazy. So try your best to understand just the bait, the logistics of what is even happening inside. And which again, going to the example that triggered this conversation, a lot of these investment clubs are saying like, We’ll just take this chunk of money from you and then we’ll divvy it out to like 12 different companies. So I understand how much harder that even is to do. How are you supposed to even, especially when you trust someone to be the middle person. And that they’re telling you like, we know we vetted it. Here’s what’s going. Like, you’re probably just like, well, all right,

Matt Mulcock: Yeah, you’re just assuming that they’re doing it the right way.

Ryan Isaac: To do, but people, well, sorry, just keep going. Wealthy people don’t do that. Wealthy people understand like what is going to ha like they’re going to hand over half a million dollars to a private equity fund. They’re sitting with some of these people going like, tell me exactly what is happening. Tell me directly what is happening before we make this transaction.

Matt Mulcock: And, and, and kind of like side questing on for a second, which is this concept, this fallacy that people have of like, I was successful with this one thing, which means it translates to success and money and everything else. That is such a fallacy. It’s like,

Ryan Isaac: You see it so much. So

Matt Mulcock: In all seriousness, this idea that I’m wealthy. I made six, I was successful in dentistry. So that means I’m going to be a real estate entrepreneur.

Ryan Isaac: Sit entrepreneur. How many times have you seen this happen? I, you know what I love too is we have some of our clients who are like later stage career, very wealthy people who had big exits or just amassed a lot of money who have, More than dip their toe into other industries and are being very candid about how poorly that went. We’re going to actually be interviewing

Matt Mulcock: To be bringing them on the show. How,

Ryan Isaac: They made literally tens of millions of dollars in the field of dentistry, one way or another, and then became developers, oil and gas people, real estate people, and they’ve been very candid about how poorly some of it has gone and how it did not translate at all.

Matt Mulcock: Yeah, I have a good friend and client I’ve worked with for years, same exact thing. Younger guy, super bright, and, He’s been really introspective about this. He sold out, made a bunch of money. Same thing. Started getting into private stuff and he’s really smart and he’s really thoughtful, really thoughtful.

And he’s actually pretty sophisticated for the average dentist in regards to this exact stuff. But I talked to him all the time and he’s like, man,

Ryan Isaac: It’s not what

Matt Mulcock: Who thinks this is easy or thinks this is

Ryan Isaac: Not passive. It is not

Matt Mulcock: But passive. Stop calling it

Ryan Isaac: It is, doesn’t even make money half the time. It is so stressful. It took me way more energy and time than dentistry ever did. Yeah. I, and you hear these stories over and over and over and over. It is just not the big glamorous thing. It’s, it’s just like the main principle of the universe. Like everything will cost you something. So if you’re getting into something thinking like this is the ticket, just stop and slow down and be like, what? This will cost me something. What is it?

Matt Mulcock: Exactly. And I’ll never say it to them directly, but they know it and they say it to me. Sometimes these types of situations, they’ll say, Man, I know what, and I just think about sometimes what would have happened if I would’ve just put it into the markets and let it sit there and enjoy my life. And I’m like, I’m not going to say it, but I’m, if you wanted me to

Ryan Isaac: To use the P word, but it sounds pretty passive to me.

Matt Mulcock: If you want me to run the numbers for you, I’ll run the numbers for you, but I would never do that to you, to your mental health.

Matt Mulcock: But, and it’s obviously goes without saying, easy to say that over the last five, 10 years of the market we’ve had

Ryan Isaac: And the longer you go out it’s easy to say when it’s 20 years. Yeah. You’re like, yeah, it would have been

Matt Mulcock: But it’s It is almost across the board. And Ryan, I know you’ve seen this almost across the board. every single client or dentist I talked to who has at least a few years experience doing private quote unquote passive real estate, whatever, and they’re actively in it almost across the board, they come back and they’re like, man, That is not as cool

Ryan Isaac: Even if they still like it, even if they’re having success, which is totally a thing, they’ll be very honest about how very not passive, how extremely stressful and time consuming and how hard it

Matt Mulcock: Yep.

Ryan Isaac: Because nothing is going to pay you lots of money that’s not

Matt Mulcock: Then you just sit back and do nothing that you don’t have to put a lot of money, energy, or time into like, it just doesn’t work

Ryan Isaac: Just doesn’t exist. And you know this by your actual career of dentistry. I mean, being very successful was a long road and took a long time.

Matt Mulcock: And it’s no different. It’s just a private investment. So for you to get to a place where you’re doing what we were saying earlier, 10 to 15 percent profit margin after debt and paying yourself a true associate wage to build a practice, to build a business, because that’s all it is. It should be just a business. It just happens to be in the field of dentistry for you to do that. It’s hard

Ryan Isaac: Yeah, mm

Matt Mulcock: Running this business. It’s freaking hard.

Matt Mulcock: It’s really hard

Ryan Isaac: All so hard.

Matt Mulcock: And it should be.

Ryan Isaac: I’m excited for some of these interviews that we’re gonna do coming up from some of these clients to just give candid experiences of what it was like to leave dentistry with a lot of money and go into other fields and See reality And you’ve probably heard the same feedback. A lot of mine are just like, I’m exiting all of this stuff. I’m piling it all back into my brokerage account. And if anything, I might just go reopen another ortho practice.

Ryan Isaac: Yeah, cause it worked. That’s what got

Matt Mulcock: That’s what got you there.

Ryan Isaac: That’s what got you there. Like you,

Ryan Isaac: And what you did is not easy. You figured out how to go extract seven figures a year out of a dental practice.

Matt Mulcock: A demo practice in

Ryan Isaac: That is not, that’s insane. That is, you figured out how to get half a million dollars out of a dental, like that’s amazing. Just keep doing it. Don’t do anything that’ll threaten or

Matt Mulcock: You can do anything that will threaten our economy.

Ryan Isaac: Where are they frothing right now? They’re frothing.

Matt Mulcock: Why are you selling to them as opposed to playing their game?

Ryan Isaac: Not because they want to help

Matt Mulcock: They don’t want to help you. They want your profits. They want your business.

Ryan Isaac: So good. Field of Dentistry is so good. Dude, it’s just like The field of dentistry is so amazing. We were saying in our last episode of all the, the pros, and you can do it until you’re really

Matt Mulcock: Yes. Yeah, just do it. Well,

Ryan Isaac: Do everything outside of that do boring and slow. And for like 30 years, and you will be a wealthy human

Matt Mulcock: And find, find your excitement and your hobbies and

Ryan Isaac: Somewhere else. And then eventually if you, yeah. And eventually if you want to find a little excitement and a stress and anxiety in money and finances, you’ll be wealthy enough to dabble and not ruin

Matt Mulcock: That’s a great point. If you want to have a little bit, if your life is too good at that point and you want to have a little stress, sure. Go have a

Ryan Isaac: You’ll be in a position to do that. You will just do it.

Matt Mulcock: I think sometimes we have this where it’s like, you know what? I want to make my life hard because it seems too easy right now.

Ryan Isaac: That is a whole other, we need to get like a Daniel Crosby

Matt Mulcock: A whole other episode. Okay. we’re just going to call this, I think this whole episode side quest. Um, the, the last kind of broad category of trade offs costs risks. This is funny because we’ve already alluded to this a lot, the potential for fraud or mismanagement and private equity investments.

Ryan Isaac: Well, the potential is because of all the things we just listed, mostly no transparency and no control,

Matt Mulcock: Control, no transparency. You don’t understand

Ryan Isaac: no compliance, no governance, no oversight. Yeah. No rules, no regulation.

Matt Mulcock: Also think of it, think of this, you compare this to, let’s say, this is why we believe so much in the financial markets, how the barrier to entry how passive it is, the ability to diversify your investment. Take a hun take a hundred thousand dollars where you’re just saying in this hypothetical example, we’ve used this entire time. you’re at this place, you now say, I’ve got a million dollars in my brokerage account. I’ve checked every other box. Okay, Matt and Ryan, I’m taking a hundred grand and I’m gonna go. Put this in private investments. Think of just from the category of diversification and risk management, right, which is the name of the game. When it comes to investing, how do I manage my risk? How easy is it to diversify that a hundred grand in private investments compared to the markets, the financial markets, it’s like not even

Ryan Isaac: Going to, it’s not even close. I’m going to side quest the side quest here. There is a famous, I hate to say the word famous, pretty popular influencer. You’ve used one of his clips in a presentation that you gave at the summit. I won’t, there’s no names, but if you say the word clown, it might kind of rhyme with a name a little bit and have the same consonants as his name. Anyway, there’s this video going around that I sent out. Like he has people interview him as if he’s being interviewed.

Matt Mulcock: Course, his assistant.

Ryan Isaac: He’s like, and it’s like, how many companies you own? And he’s like, I own like 40 companies. Like, what’s your goal? My goal is 10, 000 companies. And everyone’s like making fun of this video. Like, why not a hundred thousand companies? But I thought your goal is 10, 000 companies. If you buy one mutual fund, you can achieve that goal. But anyway, back to your point, the beauty and the name of the game of risk management is diversification and how easily you can access that in public market markets versus private markets. I mean, that’s the whole point.

Matt Mulcock: You can access that in public market, in market first, in market second

Ryan Isaac: Who made money in dentistry and they’re like, hey, I want to go

Matt Mulcock: That enough should be a red flag to walk

Ryan Isaac: You just got to ask some questions, man, you got to ask some

Matt Mulcock: Like, why am I

Ryan Isaac: What is going on? Yeah. Ask, just ask all the questions. We’re getting all heated about this, this podcast.

Matt Mulcock: Is it too spicy for a

Ryan Isaac: No, no. Oh, this is perfect. Have we talked about the actual cost like, I don’t think people understand the cost of private equity funds, like what they’re charging

Matt Mulcock: Yeah. So let’s hit

Ryan Isaac: Like you buy a mutual fund these days and you’ll pay 0.

Matt Mulcock: It is.

Ryan Isaac: 2%. Like, you know, you might pay a financial advisor, 1 percent to manage money.

Matt Mulcock: And by the way, if you’re paying an advisor a percentage point, right? We charge AUM fees. But if you’re charging an advisor AUM fees, it should be for more than just investment management. It shouldn’t just be like, I’m giving you money to like sit

Ryan Isaac: Yeah, that’s

Matt Mulcock: That’s old school. They should be actually engaging with

Ryan Isaac: Don’t realize, like, what, okay, what, what is the, billing structure of typical private funds, Matt?

Matt Mulcock: Yeah, so we should hit this. So I think if we’re drilling down, cause there’s different structures in the, in the broad term of private investments, right? There’s, there’s different ways to do this, but if we’re talking private equity, private equity funds, Hedge funds, this

Ryan Isaac: What’s their common

Matt Mulcock: Common billing, common billing is what’s called two and 20.

Ryan Isaac: Yeah. Have people been, have you ever told this to someone and they’re like, Are you serious?

Matt Mulcock: Yeah. And they’re like,

Ryan Isaac: They’re like, wait, I don’t want to do that.

Matt Mulcock: They don’t fully grasp

Ryan Isaac: don’t know how much it’s going to

Matt Mulcock: Exactly.

Ryan Isaac: Two and 20.

Ryan Isaac: Isn’t that a football term,

Matt Mulcock: Nope.

Ryan Isaac: Okay. Cause it sounds like a two and

Matt Mulcock: It’s not first in 10,

Ryan Isaac: Okay. Eagles can handle two and 20. They can.

Matt Mulcock: And 20. I don’t know if they can.

Ryan Isaac: Can do, they go deep. Is that a term?

Matt Mulcock: Two and 20, is a 2 percent management fee. No matter what.

Matt Mulcock: Like an admin fee. It’s to like run the fund.

Ryan Isaac: They charge you 2%. So right off the bat, we’re talking twice the industry average of a financial advisor who manages your investments right off the top, no matter what

Matt Mulcock: Yep. And then 20 percent any gains.

Ryan Isaac: Gains. So 2 percent off the top and then 20 percent of all the gains that they earn for

Matt Mulcock: So they’re winning no matter what.

Ryan Isaac: Oh my gosh, they’re

Matt Mulcock: They’re winning

Ryan Isaac: Why are they some of the most wealthy institutions in the world? Yeah. While still constantly underperforming two and 20.

Matt Mulcock: And twenty.

Ryan Isaac: Okay. The people that help them raise money on top of the two and

Matt Mulcock: Yep.

Ryan Isaac: The people that fundraise for

Matt Mulcock: They’re usually getting kickback

Ryan Isaac: They’re getting kickback fees, which are usually in the percents, one to 5 percent sometimes. You’re paying these costs. These are coming from you.

Matt Mulcock: Coming from you. You also have a monthly fee. You have the manipulation of people who say

Ryan Isaac: You also have a monthly fee

Matt Mulcock: To pay them

Ryan Isaac: In which I want to talk about. to me, the straight up manipulation of people who say that you need to pay them to give you access to private investments, that is a lie. That is straight up manipulation of light. Well, we’ll get to that

Ryan Isaac: Two and 20, which is the most common. Sometimes they’ll alter that. I’ve seen it like 15%. I’ve seen it a little higher than that. I’ve seen the 2 percent higher than that. They pay the middleman to fundraise, which again, you said this earlier. Make sure you know. Who your money is going to are their middle people because

Matt Mulcock: And how are they getting paid?

Ryan Isaac: How are they getting paid? Cause they’re getting kickbacks. So fun people who fundraise. So in these clubs that we’ve seen, you pay a handsome, annual fee, I guess, or monthly. I don’t know how

Matt Mulcock: Yeah, it’s usually contracted. It’s a contract. You’re paying a membership contract fee. So you’re paying like, and you gotta, it’s like a minimum year, minimum 18 months. That’s a monthly fee to get quote unquote

Ryan Isaac: Access, which I have a huge

Ryan Isaac: Matt, how many emails per week do, does dentist advisors get? And this is just our little team of private equity funds across the country, begging us to go out to dinner and be

Matt Mulcock: Access to our clients.

Ryan Isaac: They can be introduced to our

Matt Mulcock: Yeah, I mean, I’d say, minimum 10 a

Ryan Isaac: Easily.

Matt Mulcock: Could be 20.

Ryan Isaac: And these aren’t all the like little chumpy ones. Like these are some legitimate, the point being you do not need to go pay someone for, these aren’t like behind a paywall

Matt Mulcock: No!

Ryan Isaac: they’re begging for people’s money and they are. Everywhere and you can go direct. So just FYI, if you’re dying for this stuff, you can go direct to it. Literally go Google private investment, blah, blah, blah, whatever industry you’re interested in, you can go directly to them,

Matt Mulcock: You’re interested in. You can go directly to them. It would be paying to us and then saying if you are

Ryan Isaac: It would be like us responding to these dozen plus emails a week. collecting not the top ten, but the top ten highest paying to us. And then saying, if you are a client, you can pay us an extra amount of money. And we’ll give you access to these like, super, lucrative hidden private top 10 funds. What you don’t know is those are just the top 10 paying. They pay us the highest percentage of being a finder fee. And, you don’t, you could actually just skip us and go direct

Matt Mulcock: Yeah. Please do.

Ryan Isaac: And to be super transparent for, and it’s a small handful of clients that have helped find private investments. I send them direct. So I ended up being like kind of a facilitator of meetings and questions and due diligence as much as I can legally ends up back, you know, on the client and the company they’re engaging with.

Ryan Isaac: They go direct. I’m like, here they are.

Matt Mulcock: But you just said something really important. You just said legally, like it’s on the end client because you’re not taking a fee to be like, Hey, I’m going to pretend, or at least I’m going to at least make you believe, whether I say it or not, I’m sure it’s in the fine print of my stupid document, but it’s like, I’m going to make you believe doc that I’m vetting these deals. Cause I’m the one that’s like built this entire membership program.

Ryan Isaac: Paid for it,

Matt Mulcock: But I’m saying we’re not taking those fees and making you believe that That I’m like, yeah, this group’s, the, the group to go with. No, we’re saying, Hey, here are the risks. Here’s the

Ryan Isaac: Here’s the questions I would ask. Here’s the things I’m not quite understanding and I can’t get a straight answer and I’m a little

Matt Mulcock: Hey, go crazy.

Ryan Isaac: Go ahead, involve your CPA, involve your attorney. If there’s some legal structure with the way

Matt Mulcock: I’ll tell you, I wouldn’t put in more than X amount of dollars. Yeah.

Ryan Isaac: And then go direct. I’m not, you’re not paying me for this. Just go direct, but here’s yeah, exactly. So that myth to me is a straight up lie and it’s total manipulation and it’s just a money grab to tell people that they will give you special access to like the top. And it’s not the top, you guys, because most of them are now in trouble in some of these examples. just the highest paying ones that would kick off the most money to the middlemen.

Matt Mulcock: And we know groups or we know some of these investment managers or these companies who have been involved in these groups who pulled Out who literally were like we who were good ones. Like these are quality groups I want we’re not saying they’re all bad across the board, but we’re saying the ones that were quality. We’re like We don’t like what’s happening here with like the story being told that doesn’t match reality We’re actually gonna pull out of this

Ryan Isaac: Left with, in these

Matt Mulcock: So you’re probably gonna be left with in these groups the shadiest ones that are paying the highest fees You

Ryan Isaac: It honestly,

Matt Mulcock: Honestly, like, I do, we do get heated about this, clearly, and passionate about this, because of how many

Ryan Isaac: Because of how many people, how many people have been screwed? What’s the sales story like, you know, non correlated higher returns. It’s faster, blah, blah, blah. but they’re appealing to a lot of people who are emotionally burned out in the field of dentistry. They’re really stressed out in their personal lives. They’re like feeling the heat of like. Previous financial decisions or just, you know, pressures that they’re making up that they’re not good enough. They’re not. And they’re preying on those like emotions of needing something fast and easier and quicker and better. And it’s,

Matt Mulcock: They’re lying to people that want to be

Ryan Isaac: We’re having those conversations, Matt, with our clients that are interested in some of this stuff. We’re hearing, you know, we have years of relationships with these people. We know their personal lives. We know the stresses are not just about returns. Yeah. They’re like very external, emotional life stresses. And these sales pitchers are preying on

Matt Mulcock: Yeah.

Ryan Isaac: It makes me angry because these people get screwed sometimes and they’re being lied to and manipulated. And man, just the being, the field of dentistry is awesome and it takes so much to get into it. It sucks to see when it’s like put in jeopardy for like a quicker return

Matt Mulcock: Mean you just you just said it we get so fed up with the bullcrap story being sold And that’s all it is is that they’re telling the story that people buy and it makes us frustrated and sad and angry Because we’re getting we’re seeing good people get screwed

Ryan Isaac: Dude, I would rather see, I mean, this is, this is crazy. I’d rather see someone just go buy like a whole life policy from some

Matt Mulcock: Oh my gosh,

Ryan Isaac: Some goofy

Matt Mulcock: how anti hope whole life are we and I would say the same

Ryan Isaac: Is just unnecessary for most dentists. I would rather see you buy a whole life policy from the goofiest goofball

Matt Mulcock: Yeah, if you’re comparing if you’re saying one or the other

Ryan Isaac: Some like, Weird

Matt Mulcock: Get involved with these groups. I’m with you. I mean, don’t do that either. But if you’re going to do one or the other, please,

Ryan Isaac: Go pay down your

Matt Mulcock: Here’s another idea. Go pay down your debt. Here’s another idea follow the checklist. We’re talking about whether you hire us, whether you hire someone else, follow the checklist, have a plan, have a system that’s boring, that’s repeatable. And then here’s an idea. Just go enjoy your life

Matt Mulcock: Which if you have checked these boxes off and you’re on your way, you won. So now go find excitement somewhere else. Go scratch the sophistication status itch somewhere else. Hell, you know what I’d say, Ryan? I’d rather have most of these people blow money on a car.

Ryan Isaac: Yeah. Go buy your favorite or a

Matt Mulcock: Buy some sweet boat or car.

Ryan Isaac: home. Yes, go do live your like Airbnb rental dreams. There you go. Like direct

Matt Mulcock: Sure.

Ryan Isaac: And all this is

Matt Mulcock: Take a trip. How about take a

Ryan Isaac: Just go blow some money in Europe for like three weeks. You know? I don’t know. Like we could sit and name. On the other side of this, private equity, as we said in the previous episode, is the biggest, like it’s the biggest asset class in the world. Very legitimate opportunities. And like plenty of people have made their forges and continue to, we have clients who have been very successful in some of these things after. They’ve established their security and they’ve hit this checklist of things. They’re already made it and they’ve kind of dipped their toe into different things. Some of them been very successful with it, but it wasn’t necessary to get where they got.

Matt Mulcock: Come back to the idea of this risk profile. Think about the underneath risk profile is three areas, three categories of risk. Tolerance is the one people often think about. How much pain can you take capacity? How much pain can you actually take? Meaning what’s your balance sheet? It’s a checklist. It’s do I have the cashflow? Do I, am I managing my debt properly? Do I have the liquidity? Is my business in order though? That’s the capacity. Then. The need. Risk need. Do you need to do this or are you just trying to have a cool story to tell your buddies? There is no judgment there. I’m not saying that in a judgmental way. I’m

Ryan Isaac: It’s a thing we do

Matt Mulcock: Let’s be honest about it though and ask why you’re doing this. That’s where I get, again we get worked up about this, is like you don’t need to do this in 99 percent of the time. You’re doing it because you want to go tell your friends. You want to paint this picture that you’re some sophisticated investor. You don’t have to be just enjoy your family and life and go on vacation.

Ryan Isaac: I mean, we talk about this with our consultant friends, your practice, the way you’re doing your business is burning you out and you need to make changes there before you go chase something else. If you’re, if you’re the sole. Or you, you expanded beyond your comfort zone. You’ve got three locations and you were thriving in one. Address that first because that, that source of burnout is likely driving you to be like, Oh, if I just made money faster somewhere else, I could get out of this. Cause that, and that’s also the sales pitch is get out of dentistry fast, you know? And it’s like,

Matt Mulcock: You’re saying, address the cause, not the symptom. The symptom of you going and chasing down these stupid investments, that’s a symptom of the true cause, which is probably, you’re burned out, or something’s going on in your life that you need to

Ryan Isaac: Figure that out before you chase an investment, because that’s not going to solve, even if you get the returns you’re hoping for, it’s not going to solve the actual

Matt Mulcock: No.

Ryan Isaac: Man, we got like spicy, and I didn’t even have that much caffeine this morning.

Matt Mulcock: Did I get

Ryan Isaac: I didn’t hot plunge

Matt Mulcock: Even hot punch?

Ryan Isaac: I took a

Matt Mulcock: Uh, did you do your, um, doom

Ryan Isaac: I do scroll. I got to get away from that. I should just start reading again. That’s

Matt Mulcock: Can, can we, can we say really quick, the last thing we’d say on this is kind of like, what are some ways that you can, or what’s probably the way. You can, have a barrier for you

Ryan Isaac: Yeah. Talk, talk to someone who’s not getting paid on

Matt Mulcock: There. You go understand that incentives and incentives are the most powerful. the most, the most powerful, thing in finance is,

Ryan Isaac: Talk to someone who’s not getting paid on the on your private investments. Yeah

Matt Mulcock: Could be an advisor. It could be CPA could be a friend.

Ryan Isaac: Now some, okay. benefit of the doubt here. Someone might be hearing us say that and be like, well, you guys get paid to manage money, and you might be biased to say, don’t do this, so we’ll manage more. Okay, go ask your CPA who’s not managing your money. Then just go ask someone who’s not getting paid on the private investments themselves. Exactly. Start there. Just start there with this checklist of things, a list of questions, the liquidity, the cost, the, you know, the logistics of the business, the board of directors, the management team, the experience, the track record. Can you understand it? Just hit those questions with someone who’s not getting paid and then begin there. That’ll, that’ll probably solve 75 percent of the issues.

Matt Mulcock: And to your point, yeah, we’re not shy about the fact that we get paid to manage money as part of what we do. How many DSO deals do we talk people out of? Yeah.

Ryan Isaac: Do we talk people out of? I literally got me, because

Matt Mulcock: Yeah, I’m just saying I talk I literally got into it with a broker relatively recent who was like hey man Why aren’t you doing this? Like you’re gonna get paid more if you do this and I said, yeah, it’s not right for our client

Matt Mulcock: I don’t care

Ryan Isaac: And I’m not gonna get paid more like you think I’m gonna get paid more. Yeah,

Matt Mulcock: I’m not walking away with multiple

Ryan Isaac: get, I’ll get like slowly a little more money over many years, but like I don’t get a check. So yeah, it’s not that much of incentive.

Matt Mulcock: Well, hopefully we weren’t too spicy,

Ryan Isaac: Hope we were, I think it’s good

Matt Mulcock: All I hope truly is that we

Ryan Isaac: Protect

Matt Mulcock: Protect people. We shift the mindset or two, we give a different perspective,

Ryan Isaac: Some questions to ask. Yeah.

Matt Mulcock: Maybe we should again, shift the mindset where someone’s out there being like, you know what? Yeah, I’m gonna just go take my family to Europe

Ryan Isaac: Yes. Yeah. Go blow some money on a vacation with your loved ones, and then come back and see what happens. Justin. Yeah.

Matt Mulcock: When you’ve won the game financially go start investing in your life like hopefully you’re doing it along the way But if you’re gonna invest anywhere at that point if you are at a place that we the checklist we’ve hit We talked about if you’re

Ryan Isaac: Going to have done by the time

Matt Mulcock: Gonna have done by the end of the you’re there and you keep and you have a good business and you’re building it and running it The place you should be investing is your life.

Ryan Isaac: Yeah. Yeah. You’ll get the most returns there. If you have any questions for any advisor, we’re happy to chat with you. Go to dentistadvisors.com. Click the book. Free consultation. We’d love to have a chat with you. Happy to point you in the right direction. And, Matt, this was cool. And yeah, this was a good way to start Friday and, all of you for listening. Thank you very much. Catch you next time.

Keywords: private investments, private equity, investment risks, investment strategies, DSO, liquidity, risk profile, investment checklist

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